Sub-Saharan Africa Economy to Grow on Natural Resource Boom

By David Malingha Doya -
Apr 7, 2014

Economic growth in sub-Saharan
Africa is forecast to accelerate to 5.2 percent this year,
driven by increasing investment to exploit the region’s natural
resources and develop infrastructure, the World Bank said.

Gross domestic product rose 4.7 percent in 2013, the
Washington-based bank said today in an e-mailed statement,
citing Africa Pulse, a twice-yearly study it publishes. The
outlook compares with a forecast in the October edition of
Africa Pulse of 5.3 percent in 2014 from 4.9 percent last year.

The region attracted foreign direct investment worth a
“near-record” $43 billion last year, up 16 percent from a year
earlier, fueled by oil and gas discoveries in nations including
Angola, Mozambique and Tanzania, the bank said.

Economic growth in 2013 was buoyed by Democratic Republic
of Congo, Africa’s biggest copper producer, and iron-ore
producer Sierra Leone, as well as the “non-resource-rich”
nations of Ethiopia and Rwanda, according to the statement.

Challenges that may undermine expansion include weaker
demand for African commodity exports and local food-price
increases because of currency depreciation and poor crop-growing
weather in some nations. Turmoil in South Sudan and Central
African Republic also pose a “major threat” to those economies
and their neighbors, according to the statement.

Infrastructure Limitations

Poor infrastructure will “continue to limit the region’s
growth potential,” said Makhtar Diop, the World Bank’s vice
president for Africa. “Significantly more infrastructure
spending is needed in most countries in the region if they are
to achieve a lasting transformation of their economies.”

Remittances to the region grew 6.2 percent to $32 billion
last year, surpassing a record of $30 billion in 2011. Inflation
slowed to an annual 6.3 percent from 10.7 percent in 2012 as
global food and fuel price growth slowed and African governments
pursued “prudent” monetary policies, it said.

Economic expansion in sub-Saharan Africa is projected at
5.4 percent next year and 2016, according to the World Bank.

The region’s economy is probably larger than current
measurements indicate, and that would be reflected if countries
followed Nigeria and rebased their GDP data, Francisco Ferreira,
the bank’s chief economist for Africa, told reporters via a
webcast news conference from Washington today.

Nigeria’s economy surpassed South Africa’s as the largest
on the continent after the West African nation overhauled its
gross domestic product data for the first time in two decades,
the country’s statistics bureau announced yesterday.